Unused overdraft: keep or get rid of?

Miss_nell

Hi all,

While at univerisity a few years ago, I had the Halifax Student account which had the option of having an interest free overdraft of up to £1500. As I had little money as a student, I took up the offer to have £1000 of this, and used it on and off during my student years, although obviously never went over this. When I graduated and starting earning, I paid this off easily, and a year after graduation my account turned into the normal Halifax Reward account which I have had ever since.

However, I was surprised to find this £1000 interest free overdraft remained when the account changed - as that is not really a feature of a normal current account! I never use it, or come anywhere close to needing it, it just sits there. I can't see a situation where I would actually use it because, happily, I have a stable salary that covers my needs and budget, with some left over to save.

Having run a couple of free credit history reports, it does come up as a 'credit facility' but as I have never overused it, and have in fact not used it at all for around 3 years, it just shows up as being 'on track' or 'good' each month.

Is this a positive or negative thing to have on my history? On one hand it shows I have potential credit which I have used wisely or not at all...but on the other I have heard that having unnecessary credit available can make me look less attractive to lenders.

I am saving up for a deposit and looking to get a mortgage in the next 3-5years so I just want everything to be as smooth as possible.

Would you keep this overdraft or ask for it to be cancelled?

Many thanks for any advice!

grumbler

Keep it. £1K of 'available' credit is not a lot really a big amount to do any harm.
Are you sure it's interest-free?

Miss_nell

Oh, actually, now that you mention it, I have just checked; there is no reason to believe it is interest free. That would explain why I still have it - I did think it awfully odd that they had left me such a potential perk even though it was no longer a student account. Duhh, that makes this whole post rather stupid - apologies!

Although actually, I guess my question still remains: I don't use it, so should I keep it?

I think you are right, it's not much risk really and it's probably having zero effect on anything whatsoever. Thanks

colsten

Your OD will show as available credit on your credit history. If you don't plan to apply for other credit (CC, loan, mortgage etc), it won't matter.

Miss_nell

Thanks for the reply. I do plan to apply for a mortgage in the not too distant future - probably not in the next 2 years, more like 3.

jonesMUFCforever

I think you should keep it as well - the reason, it does not cost you anything just for having the facility - you have an emergency source of funds if needs be.

colsten

jonesMUFCforever wrote: »

I think you should keep it as well - the reason, it does not cost you anything just for having the facility - you have an emergency source of funds if needs be.

From the OP's point of view, it would be better to create an emergency cash fund rather than rely on an expensive overdraft.

From the bank's point of view, they'd obviously prefer if an overdraft was used.